ETF spotlight on the ETFS Zacks Earnings Small-Cap U.S. Index Fund (NYSEArca: ZSML), part of an ongoing series.
Assets: $2.8 million
Objective: The Zacks Earnings Small-Cap U.S. Index Fund tries to reflect the performance of the Zacks Earnings Small-Cap U.S. Index, which selects stocks based on the analysis of their earnings through a quantitative model, Zacks Rank, a qualitative approach and Zacks Quality screens.
Holdings: Top holdings include Goodyear Tire & Rubber (NasdaqGS: GT) 6.6%, B/E Aerospace (NasdaqGS: BEAV) 6.8%, Spirit AeroSystems Holdings (NYSE: SPR) 6.7%, Dynegy (NYSE: DYN) 2.3% and TECO Energy (NYSE: TE) 2.3%.
What You Should Know:
- ETF Securities sponsors the fund.
- ZSML has a 0.66% expense ratio.
- The ETF has 148 holdings, and the top ten components make up 31.2% of the overall portfolio.
- The fund began trading January 20, 2015.
- ZSML is up 6.8% since inception.
- The fund follows a customized, smart-beta index that targets small U.S. stocks and equally weights both component holdings and sectors tilts.
- The ETF has about a 6.5% to 6.9% tilt toward 15 sectors, including oil/energy, consumer staples, basic materials, finance, utilities, retail/wholesale, construction, aerospace, industrial products, consumer discretionary, medical, computer & technology, business services, autos/tires/trucks and transportation.
- The fund also includes a earnings focus, which tilts toward more attractively valued stocks.
- ZSML picks components based on quantitative model, Zacks Rank, a qualitative approach and Zacks Quality screens.
- The Zacks Rank refers to earnings estimates by sell-side analysts and holdings the highest ranking to stocks that have the most significant positive changes in earnings estimates.
- Zacks Quality refers to the amount of non-cash components, or accruals, in each company’s reported earnings, and only 10% of firms with the lowest sector-adjusted accruals are eligible for inclusion.
- Potential investors should be aware that the fund is relatively new, so one should utilize limit orders to better control trades.
The Latest News:
- U.S. stocks were trading lower at the start of the after last Friday’s biggest one-day gain in over three months, following the healthy jobs report.
- “Earnings were not as dire as forecast and are likely to rebound later this year,” Jim Dunigan, market strategists at PNC Wealth Management, said in a MarketWatch article.
- The markets appear to remain in a sideways pattern without any significant positive new data or signs of a potential turn.
- “The market seems to be stuck at the high end of the trading range,” Peter Cardillo, chief market economist at broker-dealer Rockwell Global Capital, said in a Wall Street Journal article. “[It’s] high in terms of valuations but…there are still no alternatives to the stock market.”
- With 455 companies reporting in, the S&P 500 is on pace for a 0.4% rise in quarter earnings, compared to a 4.6% forecasted decline at the start of the season.
ETFS Zacks Earnings Small-Cap U.S. Index Fund
For past stories in this series, visit our ETF Spotlight category.
Max Chen contributed to this article.